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Definition of Debt service
Interest payment plus repayments of principal to creditors, that is, retirement of debt.
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
Debt service parity approach
An analysis wherein the alternatives under consideration will provide the firm
In project financing, the risk that the project's output will not be salable at a price that will
Given the after-tax stream associated with a lease, the maximum amount of conventional
Net Cash after Operations
Cash flow available for debt service—the payment of interest and principal on loans. Generally calculated as cash provided by operating activities before interest
Production payment financing
A method of nonrecourse asset-based financing in which a specified
Allowance for bad debts
An offset to the accounts receivable balance, against which
An account receivable that cannot be collected.
The amount of accounts receivable that is not expected to be collected.
Refers to accounts receivable from credit sales to customers
Movement of cash from different lockbox locations into a single concentration
Cost of Debt
The cost of debt (bonds, loans, etc.) that a company is charged for
Borrowings from financiers.
Funds owed to another entity.
Ability to borrow. The amount a firm can borrow up to the point where the firm value no
An assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources.
Debt (Credit Insurance)
Money, goods or services that someone is obligated to pay someone else in accordance with an expressed or implied agreement. debt may or may not be secured.
The amount of borrowing that leasing displaces. Firms that do a lot of leasing will be
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A comparison of debt to equity in a company's capital structure.
Raising loan capital through the creation of debt by issuing a form of paper evidencing amounts owed and payable on specified dates or on demand.
An asset requiring fixed dollar payments, such as a government or corporate bond.
Any financial asset corresponding to a debt, such as a bond or a treasury bill.
The amplification of the return earned on equity when an investment or firm is financed
A bond covenant that restricts in some way the firm's ability to incur additional indebtedness.
The market for trading debt instruments.
Total debt divided by total assets.
The percentage of debt that is used in the total capitalization of a
Reducing the principal and/or interest payments on LDC loans.
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
A security representing a debt relationship with an enterprise, including a government
A set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank
A widely used financial statement ratio to assess the
Debtor in possession
A firm that is continuing to operate under Chapter 11 bankruptcy process.
New debt obtained by a firm during the Chapter 11 bankruptcy process.
Sales to customers who have bought goods or services on credit but who have not yet paid their debt.
Firm's net value of debt
Total firm value minus total firm debt.
Also called rental lease. Lease in which the lessor promises to maintain and insure the
debt maturing after more than one year.
debt with more than 1 year remaining to maturity.
grade (of product or service)
the addition or removal of product
Index Portfolio Rebalancing Service (IPRS)
Index Portfolio Rebalancing service (IPRS) is a comprehensive investment service that can help increase potential returns while reducing volatility. Several portfolios are available, each with its own strategic balance of Index Funds. IPRS maintains your personal asset allocation by monitoring and rebalancing your portfolio semi-annually.
Organizations that furnish investment and other types of information, such as
Interest rate on debt
The firm's cost of debt capital.
Internal Revenue Service
A federal agency empowered by Congress to interpret and enforce tax-related laws.
Junior debt (subordinate debt)
debt whose holders have a claim on the firm's assets only after senior
An obligation having a maturity of more than one year from the date it was issued. Also
A debt for which payments will be required for a period of more than
Long Term Debt
Liability due in a year or more.
Indicator of financial leverage. Shows long-term debt as a proportion of the
Long-term debt ratio
The ratio of long-term debt to total capitalization.
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
McNamara-O'Hara Service Contract Act of 1965
A federal Act requiring federal contractors to pay those employees working on a federal contract at
Refers to non-conventional debt that has a greater element of risk than secured debt but has less risk than equity.
MM's proposition I (debt irrelevance proposition)
The value of a firm is unaffected by its capital structure.
Monetizing the Debt
See printing money.
The debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by the central bank is the publically held national debt.
Include such things as freight, insurance, passenger services, and travel.
Original issue discount debt (OID debt)
debt that is initially offered at a price below par.
See sales mix.
See national debt.
Publicly Held National Debt
See national debt.
RATIO OF DEBT TO STOCKHOLDERS’ EQUITY
A ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company:
debt that, in the event of default, has first claim on specified assets.
debt that has first claim on specified collateral in the event of default.
debt that, in the event of bankruptcy, must be repaid before subordinated debt receives any payment.
Are debt instruments that provide financing, take primary security against either specific or all assets of the borrower, have fixed terms of repayment and charge fixed or floating interest rates.
an individual or firm engaged in a high or moderate degree of conversion that results in service output
an organizational unit that provides one or more specific functional tasks for other internal units
Revenue recognized from the provision of services as opposed to the sale of
the actual time consumed performing the functions
Short-term investment services
services that assist firms in making short-term investments.
debt that has been customized for the buyer, often by incorporating unusual options.
debt over which senior debt takes priority. In the event of bankruptcy, subordinated
debt that may be repaid in bankruptcy only after senior debt is paid.
debt instruments that provide financing for acquisitions, expansion and restructuring, take secondary security against assets, have fixed or flexible terms of repayment and charge fixed or floating interest rates.
Total debt to equity ratio
A capitalization ratio comparing current liabilities plus long-term debt to
Total Debt to Total Assets Ratio
See debt ratio
debt maturing within one year (short-term debt). See: funded debt.
Uniformed Services Employment and Reemployment Rights Act of 1994
A federal act that minimizes the impact on people serving in the Armed Forces
debt that does not identify specific assets that can be taken over by the debtholder in case of default.
Short-term, non-interest-bearing debts owed to a
Purchases of goods or services from suppliers on credit to whom the debt is not yet paid. Or a
Practice whereby the borrower sets aside cash or bonds sufficient to service the borrower's debt.
a judgment made regarding the method
Current assets less current liabilities. Money that revolves in the business as part of the process of buying, making and selling goods and services, particularly in relation to debtors, creditors, inventory and bank.
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